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Mid-Cap ETFs: Growth And Stability At A Better Value

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Mid-cap stocks – those with market capitalization between $2 billion to $10 billion – are less known than large and small cap stocks, but they can provide profitable investments, according to investment experts.

Quality, stability and value are typically associated with large cap stocks. Growth is usually associated with small-cap stocks. Mid-cap stocks tend to be ignored, despite the fact that such stocks have been among the best-performing equity groups since the beginning of the 21st Century, to Todd Shriber, ETF editor at Benzinga, writing in Investopedia.

Mid-cap companies are also more diversified than their small-cap peers, allowing many mid-sized companies to generate more consistent revenue and cash flow and provide more stable stock prices, according to Tom Lydon, writing in ETF Trends. Additionally, the mid-caps are not so big that their size would slow down growth.

The mid-caps segment outperformed large-caps, but with less volatility than small caps, Lydon added. The returns of mid-caps have also beaten those of small-caps during the trailing three-, five-, and 10-year periods, with less volatility.

In addition, mid-cap stocks spare investors the burden of picking stocks while providing the advantages of dividends.

What Makes A Mid-Cap Stock?

While market capitalization is based on market price, a stock priced over $10 is not necessarily a mid-cap stock, according to Investopedia. Analysts multiply the current market price by the current number of outstanding shares to calculate market capitalization.

If company A has 10 billion outstanding shares at $1, its market capitalization is $10 billion. If company B has 1 billion outstanding shares at a $5 price, its market capitalization is $5 billion. While company A has a lower stock price, its market capitalization is higher. Company B may have a higher stock price, but it has a tenth of the outstanding shares.

What Mid-Caps Offer Investors

Most financial advisors suggest a mix of low-, mid- and large-cap stocks to have a diversified portfolio, but some investors believe mid-cap stocks diversify the risk in addition to diversifying the portfolio.

Small-cap stocks, which offer the most growth, have the most risk. Large-cap stocks, which are the most stable, offer lower growth. Mid-cap stocks offer a hybrid of small-cap and large-cap stocks, a balance of stability and growth.

What To Look For

The most important thing to consider when searching for mid-cap stocks is potential for growth, according to Wall Street Survivor. Investors should seek companies that can grow faster than their larger peers in the industry, thereby gaining market share.

The company should be a largely undiscovered stock, giving it a cheaper valuation. Mid-caps that have low leverage and higher growth profiles that the market has not realized are good choices.

Investors in mid-cap ETFs must be sure the ETF they choose is not a misrepresented large-cap fund, Shriber noted.

A Model Mid-Cap Stock

Shriber observed the dividend yield for the underlying index for WisdomTree MidCap Dividend Fund (DON) is just under 3%, which surpasses the S&P 500 or 10-year Treasuries corresponding yields.

DON also compares favorably against S&P MidCap 400 Index, Shriber noted, which yields just below 1.3%. In addition, the weighted average market value of its holdings is around $5.2 billion, $16 billion under DON member firms’ weighted average market value.

DON delivers risk-adjusted returns, which is what matters, Shriber noted. Over the past three years, DON is 43.7% higher, versus the S&P MidCAP 400’s 35% gain. In addition, DON has been roughly 10% less volatile compared to the S&P MidCap 400.

Since March 2009, when the current bull market began, DON rose more than five-fold, surpassing the S&P MidCap 400.

Weighting Matters

Up 3.4% in 2017 and posting record highs, DON distinguishes itself in that more than 400 of its holdings are weighted to reflect the proportionate share of aggregate cash dividends that each component company is expected to deliver in the coming year. This projection is based on the most recently declared dividend per share.

DON’s weighted average market value holdings at the end of the first quarter were $7.1 billion, which is less than half of the Vanguard Mid-Cap Growth ETF’s weighted average market value. DON’s weighted average market value was roughly $1.8 billion over the S&P MidCap 400 Index.

DON’s 400 holdings are weighted by dividends, compared to mid-caps weighted by market value. Weighting by market value provides a large-cap fund in disguise as prices increase, Shriber noted.

The WisdomTree MidCap Dividend Index, DON’s underlying index, in the past six years has beaten the CRSP index by more than 35%.

WisdomTree noted that the 35% indicates the selection of the mid-cap is critical, rather than which mid-cap indexes will perform best over the next six years, which is not known at the present time.

While many indexes are named “mid-cap,” there is a significant difference in performance.
21.3% of the DON fund’s weight is allocated to consumer discretionary names. The CRSP index, by contrast, allocates less than 24% of its weight to consumer sectors.

DON allocates 29.1% to industrial and real estate names to improve its dividend yield to 3%, which is above average for mid-cap ETFs.

With $2.8 billion in net assets, DON generates income in a low-interest rate environment within mid-cap stocks, making it a category creator, according to Shriber. Dividends previously were considered a large-cap equity phenomenon.

A Compelling Multi-Factor Idea

Among mid-cap ETFs, Lydon of ETF Trends noted the John Hancock Multifactor Mid Cap ETF has a compelling multi-factor idea.

Hancock ETFs indexes use market-capitalization adjustments to increase the weights of smaller companies within the eligible universe and lessen the weights of larger names. The methodology indicates that the ETFs have a more equal-weight tilt with more exposure to smaller companies than traditional market-cap weighted index funds.

The Hancock ETF allocates 34% of its combined weight to industrial and technology stocks while the consumer and financial services discretionary sectors combine for 29% of the ETF’s weight. None of the 678 holdings command weights of more than 0.55%.

Hancock was among a small number of ETFs to hit record highs last week, bringing its year-to-date gain to just over 7%. The ETF debuted in September 2015 and now has more than $170 million in assets.

Investors currently have an opportunity to take advantage of the mid-cap ETFs before the benefits become more widely known.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.9 stars on average, based on 8 rated postsLester Coleman is a veteran business journalist based in the United States. He has covered the payments industry for several years and is available for writing assignments.




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Cryptocurrencies

Investor Watch: Holochain Provides Solid Returns Despite Bear Market

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Holochain is a distributed network project with autonomous capabilities for users embedded directly into its architecture and protocols. The creators of Holochain claim that the distribution of their proposed type of storage and data processing can change the order of coordination and interaction. Thanks to digital integration, under the control of the user, Holo can free users’ online life from corporate control.

Key team members:

  • Eric Harris-Brown: The project’s co-founder is an executive engineer who received a bachelor’s degree in computer science from Yale University. He’s the co-founder of the peer-to-peer network application provider Glass Bead Software and independent software development store Harris-Braun Enterprises. He is also the author of sophisticated health data collection websites, Android-based application for monitoring catches for the fishing industry and other successful projects.
  • Arthur Brock: The other co-founder is the chief architect who has extensive experience in the field of artificial intelligence technology, which initially applied to GM, Chrysler and Hughes. He later turned his attention to creating social architectures and at Holochain is responsible for developing target currencies that form social the dynamics of the emerging post-industrial economy.

Main features

Unlike many crypto projects, platforms such as EoS, BitLattice and Holochain represent the evolution of block technology. They do not even use blocks as such and avoid linear arrangement of transactions (progression of “blocks”). They provide cryptographic control of information, but none of these projects require the same amount of consumed energy and resources, like Bitcoin and Ethereum.

At its core, Holochain is not a chain at all. It is more like “git-archives” that can be distributed, shared, synchronized or combined using BitTorrent-like DHT technology (distributed hash table). Each application has its own Holochain, and each operator has its own chain.

Holochain is a system book and application platform, similar to a blockchain, which, according to developers, is not affected by issues such as scalability and energy efficiency. Each device in the network receives its own register (Holochain) and can function independently, simultaneously interacting with all other devices in the network for decentralized problem-solving.

Another name that is often referred to at the same time as Holochain is Ceptr. This parent project uses Holochain infrastructure. It represents a new paradigm, which in some way resembles the Internet. It uses blockchain-like technology, which is characterized by a lack of consensus dependence.

Currently, the project authors are working on two initiatives: Holochain and Holo (Holo-Host). Holochain itself is a peer-to-peer infrastructure that serves as the necessary foundation for Ceptr.

Token

The community will receive tokens called Holo Fuel. According to the technical documentation, they are intended for the implementation of large volumes of microtransactions. Holo Fuel is not a cryptocurrency or token, but a kind of crypto credit that is created to link transactions between system participants.

Stability Holo Fuel will be provided by the computing power of each device in the network. Nevertheless, the authors of the project claim that the cost of crypto credits will depend on the number of hosts on the network and the computing power used. With each new user, the value of the ecosystem will grow, which will also increase the value of the tokens.

There are several essential characteristics of Holo Fuel, including asset support, non-use of tokens and signature of transactions by both parties to the transaction.

At the moment, the main coin of the Holochain network is the HOT token of the ERC-20 standard, which will be replaced by Holo Fuel after the launch of the final platform version.

TPs

The developers claim that the transaction processing ability of their network is limitless. The thing is, every second transaction is almost meaningless because of the Holochain architecture. Instead of supporting a single consensus, the Holochain distributed hash table contains a report on the main type and legitimacy of the information provided by the individual block chains. This eliminates the need to track every action on the network and the need for global consensus.

In simple terms, Holochain, as a framework for applications and has no limit on the number of transactions per second because the ecosystem where they should be implemented does not initially exist. This parameter is floating and increases as the number of network users increases.

Holochain Target Applications

First of all, the project is suitable for frameworks that require multiple individual inputs with some limited copy available to all. The most straightforward example is online networking platforms. Holochain also additionally offers technologies for administering the manufacturing network, cooperatives, public platforms, reputational platforms or digital forms of money.

Roadmap

The project’s roadmap is provided below. Here, you can see new developments coming through the pipeline in Q1 2019.

Price

We see that Holo receives positive sentiment from investors.

Its current market cap is around $75 million with an average turnover of $2 million over 24 hours. It still holds a good standing in the bear market, with returns of around 3.5x in U.S. dollar terms, 20.68x in ETH, and 7.8x in BTC. At the time of writing, it is currently traded at $0.0005 USD.

One could expect a conservative x2 in USD if the crypto market cap would remain the same and x4 if the market cap increases twice.

I usually invest with a stop loss to ensure a risk reward of at least 1:4 and buy assets weekly.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.9 stars on average, based on 28 rated postsVladislav Semjonov has a legal and financial background. He has been involved in crypto space since early 2017 in both ICO advising positions in several ICO consultancy firms, and as an ICO analyst for VC. He began contributing for Hacked.com in April 2017.




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Cryptocurrencies

How to Make Passive Income with VeChain

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The cryptocurrency market is in a recession, and investments via ICO and trading have not generated profit for a long time. Nevertheless, this market still allows you to earn money, and now is the right time to look at it in terms of the possibility of obtaining passive income. I will consider the most promising projects in terms of passive income. One of these projects, which will be discussed in this review, is VeChain.

Project: VeChain

  • Purpose: DApps, smart contracts, supply chain management
  • Website: vechain.com
  • Geography: Offices in different countries of the world; 111 nodes in the UK, Germany, Japan, China, and South Korea
  • Company: Managed by the non-profit organization VeChain Foundation. The founder and CEO of the project is Sunny Lou
  • Current development stage: Mainnet v1.0.2 (released on September 3)

Project Features

The idea of VeChain was first introduced in 2015. It was developed as a blockchain platform for digitizing information from the real world to create a registry system for goods in supply chains and a mechanism for managing them. The system is based on two key elements – product labeling with smart chips and the formation of a blockchain base with information on each product.

The system will allow companies to simplify the supply chain, and for consumers to receive high-quality original products. The goal of the project is to create a self-managing and scalable ecosystem for business, which will ensure the transparency of information flows and increase the efficiency of cooperation of all parties involved. The developed platform has great potential in the real world and can be used in many areas, such as agriculture, automotive, retail, etc.

Benefits

VeChain benefits from many partnerships, including with large companies and via Chinese government support. This year, the project team decided to expand the scope of activities and begin to develop its platform for decentralized applications and smart contracts, which can be applied in a huge number of industries, such as supply chain management, finance, automotive, tobacco, Internet of Things and more. At this stage, investors have an opportunity to earn passive income by storing tokens.

Tokens

After switching to their blockchain, two types of tokens were released as part of the project – VET and THOR (VTHO). VET is the internal currency and the basis of the platform, necessary for the settlement of contracts. The presence of tokens in the amount of more than 1 million VET gives holders the right to participate in voting on the development of the network and the choice of nodes (1 VET = $ 0.01 THOR). Tokens are needed to complete transactions in the network, launch applications and smart contracts (similar to GAS in the NEO network). 1 VTHO = $ 0.001

How to Generate Passive Income

So now we will look at how we can make money on this project and what needs to be done to accomplish this. The main condition for obtaining income is the availability of VET tokens, which can be purchased at various cryptocurrency exchanges, such as Binance. Depending on the amount you are willing to invest in these tokens, there are two options for generating income.

Option 1: Purchase VET tokens and store them in your wallet. The advantage of this method is that there are no restrictions on the amount or period of storage of tokens. All holders of VET tokens that store them in their wallet receive THOR tokens upon storage. Therefore, it is enough to purchase them in any quantity and put them on the wallet.

Calculation example:

  • Investment amount: $1,000
  • Number of VET tokens: ~166,666 (at the rate as of 21/11/18)
  • Profit per day: 70 THOR (~$0.03)
  • Profit per year: 25,549 THOR (~$15)
  • ROI: 1.5%

Calculator – https://thorcalculator.com/

Option 2: Become a node on the network

The network is supported by nodes, divided into four levels, and the minimum amount to buy tokens to become a node in the VeChain network at the current rate is about $10,000. Payments to the nodes are taken from the pool of tokens created by the VET.

The number of tokens on the planned launch date of the main network (December 31, 2018) is 15 billion; in the future this number is reduced by 2.5 billion every six months.

Strength Nodes: 1,000,000 VET (~$ 6,000), 10 days.

Thunder Nodes: 5,000,000 VET (~$30,000), 20 days.

Mjolnir Masternodes: 15,000,000 VET (~$90,000), 30 days.

Thrudheim Masternodes: 25,000,000 VET (~$150,000), permanent master node.

Calculation example:

  • Investment amount: $ 6,000
  • Number of VET tokens: 1,000,000 (Strength Nodes)
  • Profit per day: 570 THOR
  • Profit per year: 208,050 THOR (~ $ 208)
  • ROI: 3.4%

Node statistics : https://vechainstats.com/vtho-calculator/

Summary

As you probably noticed, these figures are not very impressive. Therefore, it is time to answer the main question – what makes this project attractive for investment in the current environment? Consider these factors below:

  1. The project has high potential, as evidenced by many factors, including several large partnerships, the current stage of development, Chinese government support, etc.
  2. THOR tokens have growth potential, in which case ROI can grow significantly. For example, when the THOR price reaches the initial level (at the end of July and the beginning of August of the current year, the price reached $0.04), an investment of $ 1,000 will bring 61% per annum.
  3. The cryptocurrency market is in the red zone, and it is not yet clear at what point it will reach the bottom, however, it’s probably the best time for this kind of investment right now.

Although one should invest when there is a maximum fear, this article should not be construed as investment advice. Do you own research before committing.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.9 stars on average, based on 28 rated postsVladislav Semjonov has a legal and financial background. He has been involved in crypto space since early 2017 in both ICO advising positions in several ICO consultancy firms, and as an ICO analyst for VC. He began contributing for Hacked.com in April 2017.




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Cryptocurrencies

How to Make Passive Income Holding Ontology

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The cryptocurrency market is in a recession and investment in ICOs has not brought desired results. Nevertheless, this market still allows you to earn money, and now is the right time to look into the possibility of obtaining passive income. I would like to start looking into the most promising projects in terms of passive income. In this review, we will discuss one of the most interesting projects of the current year – Ontology.

Project: Ontology

  • Purpose: Introduce blockchain technology into the work of companies
  • Website: ont.io
  • Company Info: Managed by Onchain, which is among the top 50 leading Fintech companies in China
  • Current Development Stage: MainNet 1.0 (released on June 30)

Project Features

Ontology is a multi-level network designed for the mass introduction of blockchain technology into the work of companies. The project supports many advanced applications to create private blockchains, provide control over information and interact with other private and public blockchains and the global network. The goal of the project is to solve problems associated with the massive introduction of blockchain technology into the work of enterprises by creating an ecosystem of trust for the effective interaction of participants.

The Ontology system can be implemented in various fields of activity. The project has concluded a large number of important strategic partnerships. Partners and institutional investors include such well-known companies as Certik, Matrix, Sequoia Capital and many others.

Network levels include:

  • Level 1: connecting the Ontology blockchain with other large-scale blockchain platforms;
  • Level 2: ready-made APIs and protocols that allow you to create private blockchains;
  • Level 3: the introduction of blockchain technology in the work of organizations.

Tokens

There are two types of tokens in the Ontology network: ONT is the internal currency of the platform, which givez the right to use internal services, as well as to participate in voting on the development of the project. ONT tokens were initially distributed for free to holders of NEO in Q1 2018 for free.

ONG is the currency that serves as fuel for conducting operations on the Ontology network, by analogy with GAS tokens in the NEO network. Both currencies can be purchased on cryptocurrency exchanges. The total supply of both currencies is limited to 1 billion.

How to Earn Passive Income

Ontology provides the opportunity to receive passive income by storing ONT tokens on the wallet, since ONT storage allows you to receive ONG tokens, which, in turn, can be sold on the exchange at market price. When each new unit is generated on the Ontology network, 5 ONG tokens are issued, which are distributed to the entire number of ONT tokens. To calculate the estimated profit from the storage of tokens, you can use a special calculator.

The number of ONT tokens on the user’s account does not affect the percentage of profits earned. However, this figure may vary depending on the market value of ONT and ONG tokens. For example, if the ONT rate falls relative to ONG, then the ROI increases.

Calculation example:

  • Investment amount: $ 1000
  • Number of ONT tokens: ~1,000
  • Daily Earnings: 0.43 ONG ($0.015388 USD)
  • Profit per year: 157.7 ONG (~$ 56.2)
  • ROI: 5.47%

For calculation, the rate of tokens as of Nov. 21 is used: ONT = $ 1.01; ONG = $ 0.343

Profit calculator: https://ontcalc.com/

Summary

Ontology is a large-scale and very ambitious project capable of having a significant impact on the extensive introduction of blockchain technology in all possible areas of enterprise activity. Even though the storage of project tokens brings a relatively low percentage, in the long run, the total return on investment in ONT can be very significant since these tokens have great potential for growth.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.9 stars on average, based on 28 rated postsVladislav Semjonov has a legal and financial background. He has been involved in crypto space since early 2017 in both ICO advising positions in several ICO consultancy firms, and as an ICO analyst for VC. He began contributing for Hacked.com in April 2017.




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